Led by its young CEO Malvinder Mohan Singh, Ranbaxy is in step with the
changes globalization is bringing about. A blockbuster year 2006 with $1.3
billion in revenues, with international business contributing around 80 percent
of the revenues, manufacturing operations in nine countries and ground
operations in 49 countries have positioned the company to take advantage of the
opportunities that are abound. However, ahead are challenges that involve
surviving and flourishing in the highly competitive generics market. To retain
the leadership, the company needs to make drug discovery and drug delivery
platforms a part of the expansion agenda. All that and much more is happening at
Ranbaxy, confirms CEO Malvinder Mohan Singh, in an exclusive interview with
BioSpectrum. Some excerpts:

What is Ranbaxy aiming at in the year
2007?

With blockbuster drugs worth more than $76 billion going off
patent in the next few years, the opportunity is huge. As a consequence, a large
number of products will enter the market intensifying competition. The dynamics
of increased life expectancy, especially in the developed countries, is further
expanding the market size. Also, the governments in most markets currently have
a huge healthcare deficit, which they are trying to address by restructuring
healthcare expenditure, policies and infrastructure. This also adds to the
market size expansion. The market for generics is very large and will continue
to grow over the next 10 years.

In the next few years, in the generics space, you will see
consolidation on the global basis. Ranbaxy is well positioned to take advantage
of this opportunity. We continue to strengthen ourselves, continuously looking
at acquisitions. We will be expanding both organically and inorganically. In
2006, we closed a total of eight acquisitions across geographies including the
US, Europe, Africa and India. The net profit grew by 97 percent. In 2007, we are
looking ahead at having another great year.

What is the company's acquisition
strategy like?

We work on a very well defined financial framework. For an
acquisition we aim at a matrix of a good strategic fit plus the economic value
the acquisition brings. No matter how good the strategic fit, it is very
important for us to get a good economic value from an acquisition. We are very
conscious of the fact that every acquisition is good at a certain price and
becomes unviable beyond it. In 2006, we did eight good deals. Each one is in
line with the objective we set out with. Today there is a greater balance
between the developed markets and the emerging markets. The Terapia acquisition
in Romania has given us more than a foothold in the European markets. We are
investing another $20 million in Terapia Ranbaxy. A major portion of the
investment will be used for boosting manufacturing and R&D capabilities in
Romania. This is our strategic hub from where we will serve European and
Commonwealth of Independent States countries.

The story of Ranbaxy is that of a very old company
keeping pace with times. Today, it is the only Asian MNC to be counted
in the top 10 generics players, globally. The company was the first
Indian company to have an ambition to become a global company - long
before "India Inc" came into existence. However, to get any
further or even to retain its leadership position, investments in
R&D is a must. CEO, Malvinder Mohan Singh is well aware that R&D
will be the key driver for the company in the future. Today, Ranbaxy has
in place a total of three modern state-of-the-art multidisciplinary
research facilities in its Gurgaon campus. While the two centers focus
on the development of generics and novel drug delivery systems research,
the third one is focused on the new drug discovery research.

In addition to our strong organic growth, we will continue on
the acquisition route to acquire capabilities that will help us reach our target
of becoming a $5 billion company by 2012. To get there, we need to maintain a
growth rate of 20 percent plus and we are on course as per plan.

In an evolving market, to survive and flourish you need to
keep pace with it and Ranbaxy is very much there. Today, we are there in top 10,
globally. By 2012 we will be in top five, globally.

How is your product strategy attuned to
take you in top five, globally?

Today, we are in a position to leverage vertical integration.
Our products are available in 125 countries and we have ground presence in 49
countries. Ten years from today, Ranbaxy as a company will continue to be a
strong leader in the generics space but at the same time we will also be
leveraging IP that we have created by commercializing it. We are working at
optimizing growth, keeping short and medium term priorities in view. We have
already created a strong infrastructure boosting our manufacturing and R&D
capabilities. Every year we are investing $100 million in R&D.

Today, more money is going in generics
than true innovation but we are working on it.

The ratio of generics to true innovation investment will
balance out over time. Our product strategy revolves around this.

We already have a large product portfolio and we continue to
expand it. We are working towards maximizing the product flow to optimize the
infrastructure that we have built. We have a series of alliances through which
we partner with the technical skill set needed for the purpose. We have a large
number of products in various therapeutic areas, in various development stages
in our product pipeline.

We have high expectations from our product pipeline. Also,
the financial returns from the Atovastatin launch in the US, scheduled for 2010,
will help us take Ranbaxy to another level of growth.

How will the generics market evolve by
2012?

Drastically. Given the kind of consolidation that is
happening in the space, the companies that will move up the value chain by
acquiring the required competencies will emerge as leaders. In the market,
currently there is expansion wherein the market has become much bigger and
continues to grow yet at the same time there is consolidation as well. A number
of stronger players will emerge from where we are today. There could be a number
of surprises in the making.